The stock market is booming, but Trump can't take all the credit

Stock markets have been on the rise since Donald Trump’s electoral victory in November, but many Wall Street experts say the president-elect can’t take all the credit.

While it’s true that expectations for many of his proposed policies have accelerated the markets’ tear, the economy was in good shape way before the election, and it’s up for debate how much of an effect Trump’s election actually had.

The market has been on the rise since shortly after President Obama took office in 2009 — the year after stocks lost nearly 40% amid the financial crisis of 2007-2008. Fast-forward to January 19th, Obama’s last full day in office, and the S&P 500 closed at 2,263.69, up by about 180% from his inauguration.

Goldman Sachs CEO Lloyd Blankfein on Wednesday told CNBC that the market had been on the right path before the election and that the “Trump effect” simply added to the momentum.

“I think one of the reasons why the election had such a dramatic effect is because it was drawing people in the direction that it was already heading,” Blankfein said from the World Economic Forum in Davos, Switzerland.

“I think the markets were improving, you know, the Fed’s focus on the likelihood of them raising rates, the growth was already in it,” he said of the Federal Reserve. “We were already getting at or near full employment.”

Those factors, he said, were already “baked in” and provide a tailwind for Trump’s “stimulative” platform.

Of course, Blankfein said, Trump’s message has filled investors with greater confidence and referred to the president-elect as simply part of the macroenvironment.

“It’s not really about Trump,” said Schroder’s Head of Multi-Asset Investments Johanna Kyrklund in an interview with Markets Insider. “It’s the fact that we have seen a turn in economic activity, and optimism surrounding Trump can amplify that trend. But for now the theme that we’re watching is cyclical indicators. While they’re still going up, we’ll stay long.”

Kyrklund plans to focus on the underlying indicators, as “it’s hard to predict what Trump will say next.” She will be looking at manufacturing surveys, producer price indices, earnings revisions, and industrial confidence among others. “All of these things have been improving,” she said.

Morgan Stanley CEO James Gorman agrees. “I don’t know that I credit an individual,” Gorman said in an interview with CNBC’s Squawk Box on Thursday. “It’s more a credit to a sense of some real positive change that is likely to occur on the economic front.” He noted that positive change could have occurred whichever administration came to office.

The Republican president’s promised tax cuts, de-regulation efforts and fiscal stimulus through infrastructure spending are all policies that are pro-business and therefore provide a boost to corporations and the market.

“Frankly, corporate taxes, tax remediation, infrastructure spend – these are pretty big movers if they actually happen,” said Gorman. “And particularly for companies like ours that have large US operations.”

“The way I’d summarize it is with indicators of economic activity picking up anyways, we can afford to give Trump the benefit of doubt,” said Kyrklund.